Long-term trends rarely catch our attention. They are not news. They are “same old, same old.” But they are what matter most, not the short-term ups and downs that make the headlines briefly, and are then replaced in the news cycle.
The latest figure for unemployment is 7.2%. The figure remains above 7%, month after month. It is down slightly. This is good news. But why is it down? It is down mainly because Americans are dropping out of the job market permanently. The number of people employed, as a percentage of the job market, rises. Fewer people are working, but fewer still are looking for jobs.
The labor force participation rate has been falling ever since Clinton’s second term. This is a permanent pattern.
The main reason is the aging of the population. Oldsters are now dropping out. They are no longer contributing to the productivity of the nation. They are becoming drains on wealth, as they use up more resources: Social Security, Medicare, and pension fund assets. They are paid to drop out by the federal government. They respond to incentives.
This makes it look as though employment is rising. As a percentage of those still in the workforce, it is. In terms of jobs actually created, net, 2013 is worse than 2007.
Now, consider the long-run view of this statistic, going back to the Great Depression.
What we see is 60 years of progress, and then a reversal. This began under George W. Bush, and it has not recovered. Meanwhile, the population keeps growing. The number of people entering the age of employment keeps growing. But the growth of the job market does not keep pace. The number of jobs is not increasing fast enough to absorb them.
At some price, markets clear. The number of sellers equals the number of buyers. Why isn’t this happening in the United States? Because the price of labor is controlled by minimum wage laws. Because the number of bureaucratic restrictions on creating jobs keeps rising. Because the overhead costs of adding workers to the payroll keep rising.
Now we have ObamaCare. That will make it worse. Why hire a full-time worker? Why not hire more part-time workers, and thereby avoid added health insurance costs? Hire the best of these workers. Let the rest of them work two jobs and buy their own insurance, which they cannot afford, or else pay the fine.
The recession of 2007-9 was the great reversal in job creation. The federal government is the cause. All the promises of job creation by elections is a political pipe dream. The long-term trends are for a reduced rate of per capita wealth creation. The headlines will not change this.
To create the illusion of prosperity, the Federal Reserve System adds a trillion dollars a year of counterfeit digital money. If this ceases or even slows — the long-promised “taper” — the employment figures will get worse. The next recession will hit.
A new Congress will not change this. Neither will a new President. The trends are clear.